A realistic guide to creating your first budget

Let’s be honest, creating a budget for anything does not sound like a fun activity. In fact, anything that might impose a limit just makes people steer away from it. But if you look at the bright side, it will actually free you from worries about suddenly finding yourself short on funds, having made lots of unnecessary purchases and ultimately, regretting the fact that you did not plan your finances well – if at all.

Like most things that we’re shying away from, all we have to do is get started and don’t overthink things. Get your journal or any piece of paper that you want to write in – maybe your phone if you want to go paperless, a pencil and a calculator. Write down your monthly income on top, then list your bills below that, utilities, mortgage, your kids’ school tuition, etc. Now that you have the basic stuff, break it down a bit more.

Fixed Expenses

Any expenses that do not vary month over month are your fixed expenses. These would include your mortgage or rent, insurance costs, as well as your internet and phone bills. Enter these into your budget list first.

Calculate Average Bills

Check your utility bills over the last 6 months, or if you can, include the year prior and get its average. Do this with any other fluctuating bills.

Prioritize Debts

Payables like car payment, credit card bills and student loans should be listed under debts. Prioritize which ones should be paid off the soonest.

Grocery Budget

Be realistic about this one. Check your grocery receipts and you’ll see that you always spend more on groceries than you think you do. This is especially true when you don’t make a grocery list and even more if you go grocery shopping while you’re hungry. If you don’t have your grocery receipts anymore, just take whatever you think you are spending and add 20% to it.

It’s always someone’s birthday in your circle of friends or in your family – especially if you have a big family! Every year is an anniversary and there’s always Christmas every year. So if you think about it, there might be at least one occasion each month. Some might pass by with you just sending out warm greetings, and some you show up to empty-handed. Check your expenses and set a limit on how much you should spend on birthday, anniversary and holiday gifts.

Self Love

Set aside a few dollars a week or a month if you really need to be on a tight budget for entertainment. Just pick one of the things one might consider a “luxury” spend as your weekly or monthly treat.

Check out our blog (link to the blog about saving money) about some small changes that you can make to help you save money and be surprised at how much faster you can increase your savings!

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